The stability of oil prices has been a key factor behind the reduction in FX volatility and as can be seen below, the correlation between crude oil and the DXY Index has been very tight. Over the short-term, we see greater risk to the downside for crude oil pricesdespite the optimism expressed by the Saudi Energy Minister.
…A renewed drop in crude oil prices we believe would have greater consequences for monetary policy in the euro-zone and Japan than in the US. Both the ECB and the BoJ officially target an inflation rate including energy while we suspect upward pressure on inflation in the US is building based on a gradual tightening of the US labour markets and hence the Fed are likely to maintain more of a focus on domestically generated inflation risks fuelled by potential wage inflation. EUR/USD downside risks are beginning to emerge once more.
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from Online Forex Trading Resource http://its-veso.tumblr.com/post/151059599127
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